Cabrera Capital Daily Game Plan

Thursday March 9, 2023                                                        Trading
Desk: (312) 236-8907

TODAY’S GAME PLAN:  from
the trading desk, this is not research

DATA/HEADLINES 
 8:30ET Weekly Jobless Claims; 10:00ET Fed’s Barr speaks on crypto; 12:00ET Q4 Household Net Worth;  1:00ET 30 year note auction

TODAY’S HIGHLIGHTS:  

• Journalist Seymour Hersh said that he would publish a new investigation
  about Nord Stream next week
• Biden’s releases his budget plan which calls for a 25% minimum tax
  on billionaires
• Mitch McConnell was hospitalized after he tripped and fell
  

Global stocks retreated as investors priced the likelihood of higher interest rates and a looming US recession ahead of
key US jobs data on Friday. China’s CPI data came in weaker at -0.5% versus estimates of 0.2% and year-over-year fell to 1% from 1.5% consensus. The Chinese inflation figures eased fears of a spike in price growth that would ripple out worldwide. China’s leader
Xi called for securing more technological breakthroughs to upgrade its security against strategic risks from the west. In other news, Sweden’s economy expanded in January with GDP data showing a rise of 2% from December.  Japan’s economy grew an annualized
0.1% in the fourth quarter from the previous period, revised down from an initial reading of 0.6%.                          

EQUITIES: 

US equity futures slipped with 10 year Treasury yield holding near the key 4% as investors await tomorrow’s jobs report. During congressional
testimony,  Fed Chair Jerome Powell said on his second day of Congressional testimony that no decision has been made yet on the rate hike later this month. That soothed investors’ nerves after his hawkish remarks the previous day. The focus will now be on
the US jobs report due Friday and inflation data next week.  Forecasts for tomorrow’s employment numbers are for a modest payrolls increase of 205,000 after January’s 517,000 jump.      

Futures ahead of the bell: E-mini S&P -0.3%, Nasdaq -0.5%, Russell 2000 -0.4%, Dow -0.1%. 

In pre-market trading, Etsy (ETSY) shares decline 6% after the online marketplace operator was double-downgraded at Jefferies
to underperform from buy. LoanDepot (LDI) declines 11% after its fourth quarter revenue and loss per share results missed analyst estimates. Methode Electronics (MEI) falls 3% after cutting its annual earnings per share and sales forecasts. MongoDB (MDB) fell
as much as 11% after the infrastructure software company gave a full-year revenue forecast that missed expectations. SVB Financial (SIVB) declines 31% after offering $1.25 billion of common stock. Tesla shed more than 3% after US regulators launched a probe
over complaints about the steering wheel in some new models. Asana (ASAN) rose as much as 32% after CEO and co-founder Dustin Moskovitz said he plans to enter into a trading plan to purchase as many as 30 million shares. Peloton shares are down 1.7% after
the US bans imports of the company’s video streaming fitness devices. Silvergate lost more than half its market value after the troubled crypto-friendly bank said it’ll wind down operations and liquidate its bank. Uber (UBER) gains 1.8% after the ride hailing
company was said to be considering spinning off its freight logistics business.

European equities fell as traders took profit on risk assets amid concerns about hawkish monetary policy, while digesting
another busy day of corporate earnings. Europe’s Stoxx 600 is down 0.5%, with Credit Suisse Group a notable loser. Shares in the lender fell for the fourth day after it delayed the publication of its annual report because the SEC raised last-minute technical
questions related to previous statements. Hugo Boss AG dropped after its 2023 guidance came in below estimates. There is a downward trend in sales and earnings expectations for 2023 in Europe, UBS says, seeing most sectors’ earnings growth falling into negative
territory and below sales growth, signaling expected pressure on margins. DAX -0.4%, CAC -0.4%, FTSE 100 -0.7%. Food & Bev +0.5%, Media -0.3%. REITs -3.3%, Basic Resources -2.6%, Autos -1.3%, Travel & Leisure -1.2%, Banks -1.1%, Tech -0.8%.     

Asian shares were mixed as the latest Chinese inflation data underscored a mediocre recovery in the economy. The MSCI Asia
Pacific Index was little changed while Japan led gains in the region ahead of the Bank of Japan meeting tomorrow, where expectations are for ultra-easy policies to continue. Chinese stocks fell after the nation’s costs of food and consumer goods eased following
the end of the Lunar New Year holiday, suggesting that an economic rebound driven by reopening may take longer than expected. Sentiment in Asia has been weak recently on concerns over the Fed’s policy path and a lack of major catalysts from the National People’s
Congress in China. Chinese suppliers of materials for semiconductors surged after unsubstantiated reports of impending Japanese export curbs circulated on social media. Japan’s Topix +1%, Vietnam +0.65%, Indonesia +0.3%, ASX 200 +0.05%. Sensex -0.9%, Hang
Seng -0.6%, Kospi -0.5%, CSI 300 -0.3%, Taiwan -0.3%.

FIXED INCOME: 
 

Treasuries are higher across the belly and front-end of the curve, reversing recent flattening trend with the long-end underperforming
ahead of today’s 30-year bond auction.  The US 2/10yr curve is around -105bps after surpassing 110 basis points on Wednesday, the most in over four decades. 10-year yields around 4%, about 1bp cheaper on the day. Treasury auction cycle concludes with $18b
30-year reopening at 1pm; Wednesday’s 10-year reopening tailed by 2.7bp.

METALS: 

Gold inched higher, after hovering near its low of this year early Thursday morning. The metal’s recent recovery was crushed
this week after Powell said in testimony in Washington the central bank was prepared to raise the pace of hikes should employment or inflation data come in hot. Traders increased bets the Fed will implement a 50 basis-point rise later this month following
the comments, causing bullion to plunge. Still, Powell then softened his tone in his second day of testimony, saying no decision had been made for the March meeting. Markets are now looking to Friday’s jobs report and Tuesday’s inflation data for impetus.
Copper retreated from its biggest gain in a week following weak Chinese inflation data that indicated demand in the country was relatively muted. The strength of the country’s recovery following a year of coronavirus lockdowns has been the key question for
metals markets this year. Spot gold +0.2%, silver +0.4%.                  

ENERGY:      

Oil fluctuated attempting to stabilize after back-to-back losses that analysts blamed largely on a warning from Federal
Reserve Chair Jerome Powell this week that interest rates will need to rise higher, and possibly faster, than previously anticipated. Russia and Saudi Arabia confirmed their existing agreements to coordinate within OPEC+. OPEC+ is likely to maintain its supply
curbs in the near term amid market uncertainties, while the prospect of growing demand given China’s reopening sets a constructive fundamental backdrop for oil. Nigeria’s crackdown on oil theft has returned 240,000 barrels a day since November (to February),
placing OPEC on track toward pre-pandemic levels of 30 million barrels a day.  Meanwhile, the cost of shipping oil is surging globally as ever more vessels get tied up making deliveries. WTI +0.04%, Brent +0.1%.       

CURRENCIES:               

The dollar index edged lower after holding near a three-month high early this morning , underpinned by Federal Reserve Chair
Jerome Powell’s message that interest rates would have to go higher and possibly faster. Euro and sterling inched away from multi-month lows. The yen extended its recent advance ahead of the Bank of Japan’s policy decision on Friday, with investors on high
alert for a surprise parting shot from Haruhiko Kuroda in his final meeting.  China’s yuan weakened toward the key psychological level of 7 per dollar after the slowest annual consumer price inflation data in a year, fanning doubts about the strength of its
economic recovery. US$ Index -0.2%, GBPUSD +0.3%, EURUSD +0.1%, USDJPY -0.8%, AUDUSD +0.4%.

Bitcoin -1.7%, Ethereum -1.3%.  

TECHNICAL LEVELS: 

Colors within the report:
Green
is always the 200 period (day, week). Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance

UPGRADES:

• Asana (ASAN) raised to buy at DA Davidson; PT $21
• EnLink Midstream LLC (ENLC) raised to buy at Citi; PT $13
• Exact Sciences (EXAS) raised to buy at Citi; PT $90
• First Quantum Minerals (FM CN) raised to neutral at JPMorgan; PT C$28
• Hilton Worldwide (HLT) raised to overweight at Barclays
• Nuvei (NVEI CN) raised to outperform at CIBC; PT C$68.98
• Nuvei (NVEI CN) raised to outperform at Credit Suisse; PT C$62.10
• VICI Properties (VICI) raised to overweight at KeyBanc; PT $36

DOWNGRADES:

• ABM Industries (ABM) cut to neutral at Baird; PT $51
• Diversey Holdings (DSEY) cut to equal-weight at Morgan Stanley
• Etsy (ETSY) cut to underperform at Jefferies; PT $85
• Fortune Brands (FBIN) cut to underperform at Credit Suisse; PT $48
• Gaming and Leisure (GLPI) cut to sector weight at KeyBanc
• Guardant Health (GH) cut to neutral at Citi; PT $33
• Highwoods (HIW) cut to equal-weight at Morgan Stanley; PT $26
• Hyatt (H) cut to equal-weight at Barclays
• LoanDepot (LDI) cut to market perform at William Blair
• Qualtrics (XM) cut to neutral at JPMorgan; PT $18
• Ranger Oil Corp (ROCC) cut to hold at Truist Secs; PT $43
• TCR2 (TCRR) cut to hold at Jefferies; PT $3
• Ternium ADRs (TX) cut to market perform at Itau BBA; PT $49
• Trade Desk (TTD) cut to sell at Benchmark; PT $38
• Transcontinental (TCL/A CN) cut to sector perform at National Bank; PT C$16

INITIATIONS:

• BWLK CN (BWLK CN) rated new speculative buy at Echelon Wealth; PT C$1.30
• Bausch + Lomb (BLCO CN) rated new hold at Needham
• BigCommerce (BIGC) rated new neutral at DA Davidson; PT $11
• Brookfield Business (BBU-U CN) reinstated outperform at Credit Suisse
• CSG Systems (CSGS) rated new hold at Stifel; PT $60
• Exelixis (EXEL) rated new overweight at Wells Fargo; PT $23
• MoonLake Immunotherapeutics (MLTX) rated new buy at BTIG; PT $36
• Nurix (NRIX) rated new overweight at Barclays; PT $20
• Valeo Pharma (VPH CN) rated new speculative buy at Echelon Wealth; PT C$1
• Valero Energy (VLO) rated new buy at UBS; PT $176
• Vtex (VTEX) rated new buy at DA Davidson; PT $5

Data sources: Bloomberg, Reuters, CQG

David Wienke

Head Trader, Americas

Cabrera Capital Markets, LLC